[Moneyweb] -- DRDGOLD announced a headline loss of R11.6m for the 6 months to end December 31, 2013 and, as a result, passed on its interim dividend.
DRDGOLD announced a headline loss of R11.6m for the 6 months to end December 31, 2013 and, as a result, passed on its interim dividend.
The decline from a profit of R170.2m for the comparable period in FY2013, was the result not only of lower gold production and higher costs associated with the commissioning of its new Flotation, Fine Grind circuit (FFG).
Writing in the commentary to the results, CEO, Niël Pretorius said, while he was pleased with the performance of the high-grade FFG circuit, " The fact of the matter, however, is that it took us longer and cost us more to build it than what we planned."
For the six months, the gold miner that treats surface dumps, gold production fell 8% to 68 640oz as the average yield declined 11% to 0.179g/t. This, along with a 7% drop in gold sold and a 9% fall in the average rand gold price received to R420,615/kg, helped push operating profits down 62% to R156.1m.
But, while the 6 month numbers were poor, there were some signs of light in the quarter-on-quarter numbers.
According to the group, while there was a 4% drop in throughput to 5,856,000 tonnes during quarter, "the new circuit contributed marginally to a 9% increase in the average yield to 0.186g/t."
Resulting, the group said in a 4% increase in gold production during the quarter.
"Higher gold production resulted in an 11% decrease in cash operating unit costs to R330 585/kg. All-in sustaining costs were 14% lower at R375 246/kg."
And, while revenue was lower quarter-on-quarter, because of a fall in both gold sold and price received, the drop in net operating costs, helped push operating profits up 17%.
"The operating margin improved from 13% to 20% and the all-in sustaining costs margin from -2% to 9%. Earnings before interest, taxes, depreciation and amortisation (“EBITDA”) increased by 68% to R46.3 million. Headline earnings were R0.9 million (0 South African cents) compared with the previous quarter’s headline loss of R12.5 million (3 South African cents)," the group said.
Looking ahead, Pretorius is positive that the FFG circuit will continue to bring in benefits, the work is not yet done. "Our objective over the next few months will be to further synchronise the operation of all the components of our plant. A simple leach and elution process now has an added four layers. These components all interact and need to be coordinated to achieve and maintain steady state. We are confident that this is within reach and we will provide regular updates on progress.
But, he adds, "he lower than planned gold production this year, due to the late commissioning of the FFG and the fact that we are only now easing into steady state, means that for the near term our approach to costs and capital expenditure will remain conservative in order to preserve an adequate cash buffer."